Spot iron ore creeps towards $200

Spot prices for 63.5% Fe Indian fines gained another $1 on Tuesday to reach $197-199 per tonne cfr China. 

Offers have increased in price and volume this week, but buyers are nervous as prices edge towards the psychological barrier of $200 per tonne.

Miners are offering record-high prices of up to $203 per tonne for 63.5% Fe fines. 

“Offers continued to strengthen, supported by the delay in removing the export ban from Karnataka, and higher steel prices,” said an industry source in Shanghai. 

She noted that the iron ore price rally has slowed a little, due to weaker buying interest as well as tight supply.

“As prices may peak soon, there’s little room for profit. There’s no point in bulk buying at the moment,” said an iron ore trader in Anhui province.

A Shanghai-based trader with material in hand in hand said he’s offering $179 cfr for 60/59% Indian fines, but was not in a hurry to sell.

“For 63.5% Indian fines, no concrete deals have been heard at $200 cfr yet,” he said. 

Some traders expect spot prices to rise further to a little above $200 cfr in late February or early March. 

"But high prices will prompt domestic miners to ramp up production, which will ease the tight supply to some extent,” said another trader in Shanghai. 

Concluded tenders with Indian miners this week include $108.63 cfr for 52% fines, and $87.63 cfr for 50% fines. 

Some market participants believe no price correction will be seen before April, thanks to tight supply and a bullish steel market. 

Baosteel raised prices today on flat products by 200-300 yuan ($30-45) per tonne for March delivery. Yesterday evening, Wuhan Steel also announced a 200-400 yuan price hike for March.